Under what conditions is a Benihana franchisee required to participate in a Purchasing Program?

According to Benihana's 2024 Franchise Disclosure Document, participation in a Purchasing Program is mandatory under specific circumstances. Benihana retains the discretion to designate any geographical area for establishing a Purchasing Program. If such a program is in place in the area encompassing a franchisee's Benihana restaurant when it opens for business, or if a Purchasing Program is established during the term of the Franchise Agreement, the franchisee must immediately participate in it.

This means that a prospective Benihana franchisee needs to determine whether a Purchasing Program already exists or is planned for their location. If so, they will be obligated to participate from the outset. If a program is introduced later during the franchise term, they must join it at that time. This mandatory participation could impact the franchisee's costs and sourcing options, as they would be required to purchase through the designated program.

It is important for potential franchisees to inquire about the likelihood of a Purchasing Program being established in their area and to understand the terms and conditions of such a program. This includes understanding what products or services are covered by the program, the pricing structure, and the approved suppliers. Franchisees should also clarify whether they have any input into the selection of suppliers or the negotiation of prices within the Purchasing Program. Understanding these factors is crucial for assessing the potential financial impact and operational flexibility of the Benihana franchise.